As highlands pepper prices fall, farmers hold out

According to the Vietnam Pepper Association (VPA), domestic pepper prices started to decline back in 2016 when pepper farms over-expanded due to farmers’ anticipation.

Pepper importing countries have receded their pepper demands to create further downward pressure on prices. 

In 2015 to 2016, pepper prices in the Central Highlands reached a record high of VND230,000 (US$10.2) per kilogramme, making farmers increase the size of their farms despite warnings from local authorities.

Le Nguyen, a pepper farmer in Thanh Binh commune of Dong Nai province, said that his two hectare pepper farm yielded 5.5 tonnes of dried pepper in March this year, but instead of selling immediately, he decided to wait for higher price than the VND117,000 (US$5.22) per kilogramme back then. As such, after three months, the severe drop in pepper prices trouble him greatly. “If I sell now, best I can do is break even,” said Nguyen.

Le Van, another farmer from the same commune, said that in addition to the three tonnes of pepper that he harvested from his own farm, he had purchased an additional two tonnes at VND110,000 (US$4.9) per kilogramme. By his own calculation, the current price will bring him a loss of nearly VND90 million (US$4,016) on the other additional tonnes alone.

Vo Van Thanh, a farmer in Dong Nai province, said that he will continue to refrain from selling no matter what, as the price is already too low to make a profit. He had already sold five tonnes at the beginning of March this year at VND120,000 (US$5.35) per kilogramme, and still has two tonnes in storage.

In general, farmers still have faith that the pepper price will rise, in spite of the current lowest price in six years. Many farmers report that they will continue to stock up on pepper instead of selling to make even.

The VPA advised farmers to remain calm and refrain from mass sales that would drag prices down. They also advised farmers to sell immediately when prices show signs of recovery instead of waiting for the VND200,000 (US$8.9) per kilogramme mark they had hoped for.

Huynh Thanh Vinh, Director of the Agriculture and Rural Development Department of Dong Nai province, said that his department has persuaded farmers to reduce pepper farming areas and connected directly to manufacturers, bypassing middlemen.

Nguyen Huu Phuoc, Vice Chairman of the People’s Committee of Hung Loc commune, Nghe An province, said that in his locality, while only several merchants are losing big due to wrong predictions of rising pepper price when it was still at a high from VND110,000 to 130,000 back (US$4.9 to 5.8) per kilogramme in March 2017, most farmers refuse to sell as they wait for the price to rebound. At this point they are neither making a profit nor a loss.

According to the Ministry of Agricultural and Rural Development, Vietnam exported about 75,000 tonnes of pepper worth US$456 million in the first four months of 2017. The national total output is about 150,000ha, set to produce about 300,000 tonnes of pepper in the next two to three years.